Tag: bank fraud

Ukraine’s largest lender PrivatBank said Monday it had filed a $3bn lawsuit against PwC, claiming the auditor failed to call attention to “the huge fraud” plaguing the bank for years.

PrivatBank was nationalised in 2016 after authorities blamed billionaire Igor Kolomoyskiy and other bank owners for issuing bad loans to cronies and having insufficient capital to stay afloat.

The lawsuit was filed against Cypriot and Ukrainian subsidiaries of the global auditing firm for alleged breaches of their duties and auditing responsibilities between 2013 and 2015, the bank said.

It was filed last Friday at a Cypriot court, it said.

PrivatBank CEO Petr Krumphanzl accused PwC of failing to identify “huge fraud within the bank over many years which resulted in virtually the entire corporate loan book of the bank being non-performing and without any or any adequate security.”

There was no immediate comment from PwC.

PrivatBank — the nationalisation of which was welcomed by the West — holds more than a third of Ukraine’s deposits.

The Ukrainian authorities last year removed PwC from a list of firms approved to audit the country’s banks as punishment for its alleged failure to expose the long-running fraud at PrivatBank.

Ukraine’s central bank welcomed the lawsuit.

“This will be an important step in the recovery of PrivatBank, helping to ensure that historical failings at the bank are resolved properly and transparently,” it said in a statement.

Last December, Ukraine’s finance ministry said the authorities had spent nearly 140 billion hryvnyas (around $5 billion) on recapitalising PrivatBank to cover the losses caused by the withdrawal of money from the lender and poorly-secured loans handed out before nationalisation.

The same month, a London court froze the assets of Kolomoyskiy, Ukraine’s second-richest man worth $1.3 billion according to Forbes’ 2016 ratings.

The bank said at the time it was seeking to recover more than $2.5 billion through the legal proceedings.

Nigeria Deposit Insurance Corporation says the number of fraud cases attributed to internal abuse by staff of banks increased from 231 in 2016 to 320 in 2017.

Head, Communications and Public Affairs of NDIC, Mr. Mohammed Ibrahim, said in a statement in Abuja on Sunday that the figure was in the organisation’s recent report on off-site supervision of the Deposit Money Banks.

“The report relied on a total of 286 responses received from 26 banks during the period and there were 22 NIL monthly responses from the banks as at year ended December 31, 2017.

“The 286 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries which is 56.30 per cent higher compared to 16,751 cases reported in 2016.

“Similarly, the amount involved in the fraudulent activities documented increased by N3.33 billion from the N8.68 billion reported in 2016 to N12.01 billion in 2017 or 38 per cent.

“However, the expected/actual loss slightly-decreased by N24.42 million or 1.03 per cent from N2.39 billion in 2016 to N2.37 billion in 2017.”

Ibrahim said Internet/Online-banking and ATM/Card-related fraud-types reported constituted 24,266 or 92.68 per cent of all the reported cases, resulting in N1.51 billion or 63.66 per cent of losses in the industry in 2017.

He said the report also documented other miscellaneous crimes, such as fraudulent transfers/withdrawals, cash suppression, unauthorised credits and fraudulent conversion of cheques.

Others are diversion of customer deposits, diversion of bank charges and presentation of forged or stolen-cheques.

He said that 22 Licensed Commercial Banks and four Merchant banks rendered 286 returns on dismissed/terminated staff as a result of fraud and forgeries during the year under review.

Ibrahim said out of the 26,182 fraud cases reported by the 26 Licensed Banks, 320 cases were attributable to internal collaboration by bank staff.

“A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016.

“That represented an increase of 38.53 per cent in the total number of fraud cases reported in 2017.

“However, the losses arising from the reported cases decreased from N760 million in 2016 to N682 million or about 11.43 per cent in 2017.”

Ibrahim said that NDIC attributed the improvement to additional internal control measures adopted by the banks in the wake of the proactive corrective measures taken to ensure their compliance with good corporate governance principles.

He said NDIC would investigate some banks for inadequate rendition of returns on instances of fraud, forgeries and cases involving members of staff dismissed or their appointments terminated on grounds of fraud.

He said that NDIC made the decision in light of the increase the report revealed.

He said that Section 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) requires all DMBs to submit monthly information/returns on fraud and forgeries to the corporation.

He said in spite of the Fidelity Insurance Cover taken by banks to address fraud perpetrated by staff, there was still need for the banks to further enhance their internal control and security measures.

He said this was because of the rising trend of E-Channels (Online banking and Card-related) fraud and forgeries in the industry which remained a serious cause for concern to the organisation. (NAN)